Emergency Commercial Rent Assistance for Small Businesses

April 27, 2020

On Friday, April 24, 2020, the federal government announced $900 million in commercial rent relief to small businesses and their landlords through a new Canada Emergency Commercial Rent Assistance (CECRA) program. The program will provide forgivable loans to eligible commercial property owners experiencing potential rent shortfalls because their small business tenants have been heavily impacted by the COVID-19 crisis.

The federal government has partnered with all provinces and territories to lower rent by 75% for small businesses impacted by COVID-19 for the months of April (retroactively), May and June. This program, which will be provided through the Canada Mortgage and Housing Corporation (CMHC), is expected to be available as of the middle of May.

Through the federal-provincial partnership the Ontario government will commit $241 million of the total $900 million, specifically earmarked for the Ontario - Canada Emergency Commercial Rent Assistance Program (OCECRA).

Key details of the program:

-The program will provide forgivable loans to qualifying commercial property owners to cover 50% of the rent payments for April, May and June for eligible small business tenants who are experiencing financial hardship.

-The loans will be forgiven if the mortgaged property owner agrees to reduce the rent of eligible small business tenants by at least 75% for the three corresponding months under a rent forgiveness agreement. The agreement will include a term not to evict the tenant while the agreement is in place.

-Small business tenants paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues are eligible for the program. This support will also be available to non-profit and charitable organizations.

While this program is a welcomed relief for many small businesses, it may not be applicable to your organization. So what options are available for you? The federal government has said that rent support for larger businesses will be announced soon. We are continuing to monitor the news and announcements coming out from the government. In the interim, it may be beneficial to speak with your landlord about options around rent abatement, deferral, or an amendment to your lease. Just be aware of the unintended consequences associated with each of these options.

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